The Pound Sterling Holds Steady Near 1.3400 Against the US Dollar
- Economists Anticipate US Manufacturing Contraction in September
- BoE MPC Member Megan Greene Warns of Potential Rise in Inflation
In today’s London session, the Pound Sterling (GBP) remains within a tight range near the critical resistance level of 1.3400 against the US Dollar (USD). Investors are on edge as they await key economic data from the United States, which could impact the Federal Reserve’s interest rate decisions moving forward.
US Labor Market Data to Provide Insight
- The Federal Reserve initiated a policy-easing cycle with a 50 basis points interest rate cut on September 18, reflecting concerns over slowing job growth and confidence in inflation returning to the 2% target.
- Investors will closely monitor the US ADP Employment Change and Nonfarm Payrolls (NFP) data for September to assess the health of the labor market and potential future rate cuts by the Fed.
Fed Chair Jerome Powell’s recent comments at the National Association for Business Economics conference suggested a cautious approach to rate cuts, with expectations of two more cuts by year’s end totaling a reduction of half a percentage point.
Focus on US Economic Data
- Today’s session will highlight the US JOLTS Job Openings data for August and the ISM Manufacturing PMI data for September, offering insights into job market stability and factory sector activity.
- Economists expect job openings to remain steady around 7.67 million and a slight improvement in the ISM Manufacturing PMI to 47.5.
Market Update: BoE Member Megan Greene’s Comments Boost Pound Sterling
- The Pound Sterling strengthens as market expectations for a November interest rate cut by the Bank of England (BoE) diminish following remarks by MPC member Megan Greene.
- Greene’s warnings about a potential rise in inflation due to a consumption-driven recovery in the UK have shifted market sentiment towards a less dovish outlook.
- While the BoE may still consider a rate cut in December, Greene’s comments have raised concerns about price pressures and inflation levels.
Upcoming Events and Data Releases
- BoE Chief Economist Huw Pill’s speech at 14:00 GMT will provide further guidance on the interest rate outlook for the UK.
- Investors will also monitor the revised estimate of the S&P Global/CIPS Manufacturing PMI data for September at 08:30 GMT.
Technical Analysis: Pound Sterling’s Outlook Near 1.3400
The Pound Sterling remains firm near the key resistance level of 1.3400 against the US Dollar in European trading hours. The GBP/USD pair’s outlook is supported by a positive trendline breakout and bullish momentum indicators.
Key technical levels to watch:
- Resistance: 1.3500 psychological level
- Support: 20-day EMA near 1.3235
Overall, the Pound Sterling’s technical outlook remains positive, with potential for further upside towards 1.3500.
Pound Sterling FAQs
Here are some frequently asked questions about the Pound Sterling:
1. What is the Pound Sterling (GBP)?
The GBP is the official currency of the United Kingdom, dating back to 886 AD. It is one of the most traded currencies globally, accounting for 12% of all foreign exchange transactions.
2. What Influences the Value of the Pound Sterling?
Monetary policy decisions by the Bank of England, economic data releases, and trade balance indicators play a significant role in determining the value of the Pound Sterling.
3. How Does Economic Data Impact the Pound Sterling?
Indicators such as GDP, PMIs, and employment data can influence the direction of the GBP. A strong economy and positive data can boost the Pound Sterling, while weak economic indicators may lead to depreciation.
4. Why is the Trade Balance Important for the Pound Sterling?
The Trade Balance measures a country’s exports and imports. A positive balance strengthens the currency, as it indicates strong demand for exports, while a negative balance may weaken the currency.